KUALA LUMPUR (June 9): With its initial order book target of RM1.2 billion about to be reached, Kerjaya Prospek Group Bhd has increased its order book target for the financial year ending December 31, 2022 (FY22) to match its FY19’s RM1.5 billion.

At a press conference following a framework agreement signing ceremony with Samsung C&T (KL) Sdn Bhd held on Thursday (June 9), Kerjaya Prospek chief executive officer and executive director Tee Eng Tiong said as the group has achieved RM1.17 billion order book year to date, its target has been adjusted higher to RM1.5 billion.

“I think this is quite conservative because we are not sure what will happen in the market in future. But we are very optimistic that the market is recovering now, so setting [the target at] RM1.5 billion is actually quite conservative,” Eng Tiong said.

Riding on this momentum, Kerjaya Prospek non-executive chairman Tee Eng Ho noted that the construction market could return to pre-pandemic or “normal” levels in 2023.

“The way I see the construction market in Malaysia, slowly there are quite a lot of high-rise building launches coming out maybe in the second half of this year or last quarter this year. So next year will definitely be much better than this year," he said.

In order to offset higher raw material prices, Eng Ho said house prices have to increase 10% year-on-year and that the affordability issue in the housing market — induced by the Covid-19 pandemic impact — will be self-adjusted in 2H2022 or 2023.

Kerjaya Prospek's unit Kerjaya Prospek (M) Sdn Bhd inked a five-year framework agreement with Samsung C&T — a wholly-owned subsidiary of engineering and construction company Samsung C&T Corp — to jointly pursue various types of business opportunities for construction contracts exceeding RM300 million.

“This agreement allows both parties to embark on a long-term strategic alliance that is expected to accelerate growth for both companies in the construction industry in Malaysia.

“The partnership strategically aligns both companies for the long-term by combining the strengths of Kerjaya in high-rise constructions with Samsung C&T’s expertise in complex and sophisticated buildings.

“More importantly, the partnership leverages on the respective merits of Kerjaya and Samsung C&T to create a compelling value proposition for both parties, their customers, and shareholders,” the group said in a statement on Thursday.

Kerjaya Prospek noted that the agreement will be automatically renewed on a rolling basis after the expiry for subsequent periods of one year until the agreement is terminated by either party.

Towards illustrating its commitment to the collaboration, Samsung C&T via its wholly-owned subsidiary Vista Contracting & Investment Global Pte Ltd will subscribe to the entire 25.24 million new shares in Kerjaya Prospek — 2.04% of the group’s existing share capital — under the latter’s proposed private placement.

At RM1.60 sen apiece, Kerjaya Prospek said it expects to raise RM40.38 million in proceeds from the exercise, of which RM39.82 million will be utilised as working capital of ongoing projects, while the remaining RM558,000 will be for the estimated expenses of the exercise.

Shares in Kerjaya Prospek finished down four sen or 3.31% at RM1.17, giving the group a market capitalisation of RM1.45 billion.